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    RNG
    Earnings call· Jun 2026(Q2 FY26)

    RingCentral, Inc. RNG

    Jul 23, 2026 Source

    Executive summary

    RingCentral Q2 FY26 — Strong AI Adoption and Increased Dividend

    RingCentral delivered a robust quarter, driven by strong AI product adoption and disciplined financial execution. The company is actively transforming into an AI-native leader, with significant R&D investments yielding tangible results in customer engagement and retention. Strategic partnerships and a focus on capital returns underscore a confident outlook for sustained profitable growth.

    Highlights

    5

    • Total revenue reached approximately $657 million, up 5.9% year-over-year, exceeding the high end of guidance.

    • Non-GAAP operating margin expanded to 23.4%, an increase of nearly 90 basis points year-over-year, surpassing expectations.

    • Free cash flow generated $180 million in the quarter, up 25% year-over-year, leading to a raised full-year outlook of $615 million to $625 million.

    • ARR from customers utilizing at least one paid AI product doubled year-over-year, now representing approximately 13% of total ARR.

    • The Board approved an increase to the quarterly dividend to $0.125 per share, reflecting confidence in long-term free cash flow generation.

    Guidance & targets

    21
    CategoryTargetConfidence
    Full-year 2026 Subscription Revenue
    $2.55 billion to $2.561 billion
    high materiality
    High
    Full-year 2026 Subscription Revenue Growth
    5.1% to 5.5%
    high materiality
    High
    Full-year 2026 Total Revenue
    $2.635 billion to $2.646 billion
    high materiality
    High
    Full-year 2026 Total Revenue Growth
    4.8% to 5.2%
    high materiality
    High
    Full-year 2026 GAAP Operating Margin
    9% to 9.7%
    medium materiality
    High
    Full-year 2026 Non-GAAP Operating Margin
    Approximately 23.6% to 24%
    high materiality
    High
    Full-year 2026 Free Cash Flow
    $615 million to $625 million
    high materiality
    High
    Full-year 2026 SBC
    $240 million to $245 million
    medium materiality
    High
    Full-year 2026 Fully Diluted Share Count
    86.5 million to 87 million shares
    medium materiality
    High
    Full-year 2026 Non-GAAP EPS
    $4.96 to $5.10
    high materiality
    High
    Full-year 2026 Free Cash Flow per Share
    $7.07 to $7.23
    high materiality
    High
    Q3 2026 Subscription Revenue
    $643 million to $649 million
    high materiality
    High
    Q3 2026 Total Revenue
    $664 million to $670 million
    high materiality
    High
    Q3 2026 GAAP Operating Margin
    7.2% to 8.6%
    medium materiality
    High
    Q3 2026 Non-GAAP Operating Margin
    23.5% to 24%
    high materiality
    High
    Q3 2026 Non-GAAP EPS
    $1.25 to $1.30
    high materiality
    High
    Q3 2026 SBC
    $63 million to $67 million
    medium materiality
    High
    Q3 2026 Fully Diluted Share Count
    Approximately 86.5 million shares
    medium materiality
    High
    Medium-term GAAP Operating Margin Target
    20%
    high materiality
    High
    Medium-term SBC as a percentage of total revenue
    3% to 4%
    medium materiality
    High
    Gross Debt Reduction
    $1 billion
    high materiality
    High

    Operational metrics

    23
    SBC as a percentage of revenue
    9%Down 150 bps YoY
    Q2 FY26

    Reflects disciplined approach to equity management.

    Net leverage
    1.5x
    Q2 FY26

    Reduced from prior period.

    Gross debt reduction
    $85M
    Q2 FY26

    Total gross debt reduced by $130M in H1 FY26.

    Shares repurchased
    2.2M shares
    Q2 FY26

    Part of capital return strategy.

    Remaining repurchase authorization
    $326M
    End of Q2 FY26

    Available for future share repurchases.

    Diluted share count
    87M sharesDown 6% YoY
    Q2 FY26

    Reduced to 2019 levels.

    Undrawn credit capacity
    $355M
    Q2 FY26

    Maintained for financial flexibility.

    Quarterly dividend
    $0.125Increased
    Quarterly

    Board approved increase.

    R&D investment
    Over $0.25B
    Annually

    Invested to expand portfolio and accelerate innovation.

    Voice minutes
    Approximately 40BGrowing faster than user base
    Annually

    Carried on the platform across 45 countries.

    Text messages
    More than 3BGrowing faster than user base
    Annually

    Carried on the platform.

    ARR from customers with paid AI products
    Approximately 13%Doubled YoY
    Q2 FY26

    Represents customers utilizing at least one native paid AI product.

    Net retention for AI-using customers
    Well above 100%
    Q2 FY26

    Meaningfully higher ARPU than the rest of the base.

    AIR customers
    More than 16,000Up 400% YoY
    Q2 FY26

    Paying AI Receptionist customers.

    ACE customers
    More than 6,300Growing more than 70% YoY
    Q2 FY26

    AI Conversation Expert customers.

    AI-led new products growth
    Nearly 60%
    H1 FY26

    Growth during the first half of the year.

    CEB customers
    More than 9,600Up more than 80% sequentially
    Q2 FY26

    Customer Engagement Bundle customers.

    Missed call rate reduction for AIR customers
    From 20% to close to 0%
    Recent survey

    Based on a recent survey of AIR customers.

    AIR savings (GTR Insurance)
    $6,000
    Monthly

    Example of savings for a small business using AIR.

    AI agent containment rate (BPO)
    Above 85%
    Q2 FY26

    Achieved with Air Pro and CRM integration, with no live agent transfers.

    ACE calls processed growth
    Double digitsQoQ
    Q2 FY26

    Record ACE adoption.

    Monthly net retention
    Above 99%Improving
    Q2 FY26

    Customer trends remained healthy.

    Subscription gross margin
    Above 80%Stable
    Q2 FY26

    Remained stable.

    Industry KPIs

    7
    MetricValueDetails
    Capacity CAPEXOver $0.25BUSD
    Revenue growth$657M total, $634M subscriptionUSD
    Arr net new arrApproximately 13% of ARR from customers with paid AI products% of ARR
    Customer account countMore than 16,000 AIR customers, More than 6,300 ACE customers, More than 9,600 CEB customerscustomers
    Operating FCF margin rule of 4023.4% Non-GAAP operating margin, 23% FCF margin%
    Ai product adoption monetizationApproximately 13% of ARR from customers with paid AI products, >16,000 AIR customers, >6,300 ACE customers, >9,600 CEB customers
    Net revenue net dollar retentionWell above 100% for AI-using customers, Above 99% monthly net retention%

    Orderbook & backlog

    1
    ARR from customers with paid AI productsApproximately 13% of ARRQ2 FY26

    Doubled YoY

    Represents customers utilizing at least one native paid AI product; these customers have net retention well above 100% and meaningfully higher ARPU.

    Product announcements

    4
    ProductTypeDetails
    AIR (AI Receptionist)update
    Air Proupdate
    RingCXupdate
    Customer Engagement Bundle (CEB)launch

    Deals & partnerships

    2
    NICEExpanded strategic partnership for co-selling

    RingCentral and NICE announced an extension and expansion of their partnership, creating a symmetrical, mutually reinforcing relationship.

    AvayaRestructured relationship for customer transition

    Restructured relationship to streamline customer experience and better align with strategic directions. RingCentral will continue to serve the ACO community under its brand.

    What to watch in Q3 FY26

    5

    ARR from customers utilizing paid AI products

    Next quarter
    CurrentApproximately 13% of ARR, doubled YoY
    TargetContinued growth and increased percentage of total ARR

    Why it matters

    Indicates the success of AI monetization strategy and future revenue quality.

    ARR from customers who utilize at least 1 of our native paid AI products now represent approximately 13% of ARR, having doubled year-over-year.

    Q&A highlights

    6

    How will the expansion of AIR, particularly with AirPro, act as a tailwind for RingCX transactions, improving AI attach, ACV, or competitive win rates?

    Vlad Shmunis explained that AIR and AirPro are integral to the new UCaaS and CCaaS, allowing them to charge extra for differentiated AI at good margins. He highlighted that the combined solution saves customers time and money, empowers human agents, and creates a unique 'flywheel effect' where AI and human agents learn from each other, making AI a major tailwind for both growth and margins.

    “AI is rapidly becoming an integral part of the offering, okay? We are -- to your financial part of your question, we're absolutely able to charge extra dollars for it at a good margin. And for the simple reason that combined solution is, it basically saves customer time and money.”

    asked by Elizabeth Elliott · answered by Vladimir Shmunis

    2 min read5 chapters

    Detailed Narrative

    01

    AI-Native Transformation and Product Traction

    RingCentral is actively transforming into an AI-native company, investing over $0.25 billion annually in R&D to expand its portfolio and deepen its competitive moat. This transformation is yielding significant results, with ARR from customers utilizing at least one paid AI product doubling year-over-year to approximately 13% of total ARR. Products like AIR (AI Receptionist) and ACE (AI Conversation Expert) are seeing strong adoption, with AIR customers growing 400% YoY to over 16,000 and ACE customers growing over 70% YoY to more than 6,300.

    02

    Strategic Partnerships and Market Positioning

    The company announced an expanded partnership with NICE, where NICE will begin marketing and selling RingEX in combination with CXone, leveraging NICE's strong enterprise presence. This symmetrical partnership aims to deliver AI-powered customer and employee experiences across market segments. Additionally, RingCentral restructured its relationship with Avaya, transitioning existing Avaya Cloud Office customers and partners directly to the RingCentral platform, which is viewed as a win-win for all parties involved.

    03

    Financial Discipline and Margin Expansion

    RingCentral continues to demonstrate strong financial discipline, driving profitable growth and expanding margins. Non-GAAP operating margin reached 23.4% in Q2, up nearly 90 basis points year-over-year. The company is ahead of schedule in reaching its target of 20% GAAP operating profit, now expecting to achieve this milestone within the next 2 to 3 years. Stock-based compensation (SBC) as a percentage of revenue declined by approximately 150 basis points YoY to 9% in Q2, with a medium-term target of 3% to 4%.

    04

    Robust Free Cash Flow and Capital Allocation

    The company generated $180 million in free cash flow in Q2, a 25% increase year-over-year, leading to a raised full-year free cash flow outlook of $615 million to $625 million. This strong cash generation supports a balanced capital allocation strategy, including investing in innovation, reducing gross debt (on track to reach $1 billion by year-end 2026), and returning capital to shareholders. The Board approved an increase in the quarterly dividend to $0.125 per share, alongside continued share repurchases of $94 million in Q2.

    05

    Customer Engagement Bundle (CEB) Success

    The new Customer Engagement Bundle (CEB), which adds lightweight contact center capabilities to RingEX, is scaling rapidly. It now serves more than 9,600 customers and has grown over 80% sequentially. CEB's success is attributed to its ability to fill an unmet need for informal contact centers, offering features like Call Queues, Shared SMS Inbox, and Analytics, and naturally attaching with AI products like AIR and ACE.

    AI-generated summary of the company’s earnings call. Not investment advice.